Apple's earnings for the first quarter of 2011 crushed analyst expectations on Wall Street, who heaped praise on the company for beating estimates by $2 billion.

Apple posted record revenue of $26.74 billion, helping the company earn profits of $6 billion, or $6.43 per diluted share, in the three-months span ending Dec. 25, 2010. The Cupertino, Calif., company blew out even Wall Street's lofty expectations by selling 16.24 million iPhones, 7.33 million iPads, 4.13 million Macs, and 19.45 million iPods.

Following the news, analysts on Wall Street responded with their take on Apple's best quarter ever by increasing AAPL stock price targets and providing their take on where the company is headed next.

Needham & Company

Analyst Charlie Wolf referred to Apple's first quarter of fiscal 2011 as "stunning," noting that Apple set records in its three major product categories of the iPhone, Mac and iPad. iPad units in particular blew out Wall Street's consensus expectations of 6 million sold -- the touchscreen tablet moved 7.3 million units over the holidays.

"On the market for just three quarters, the iPad took center stage," Wolf wrote. "The device is opening new markets, especially in the enterprise. We believe the trajectory of iPad sales could surprise on the upside as more and more businesses customize it for their mobile professionals."

Wolf has increased his 12-month price target on AAPL stock to $375, and has increased his 2011 earnings per share estimate from $18.45 to $22.25. He has an initial 2012 EPS estimate of $25.50.

RBC Capital Markets

Apple's typically conservative guidance for its second quarter of fiscal 2011 exceeded the expectations of Wall Street, analyst Mike Abramsky noted. Apple has predicted it will report revenue of about $22 billion in its next earnings release, higher than Wall Street's anticipated $21 billion.

The iPhone maker's fundamentals are strong, he said, which will be a comfort to investors even as uncertainty looms with the absence of Chief Executive Steve Jobs, who announced this week he is on a medical leave.

Abramsky expects Apple to reach $99 billion in revenue in the company's 2011 fiscal year, with a total of $23.30 earnings per share. Those numbers are up from his previous estimates of $91 billion in revenue and $20 earnings per share. The analyst also increased his 12-month price target to $425, from $395.

Piper Jaffray

Apple's December quarter managed to keep Apple's revenue growth accelerating for the firth quarter in a row, analyst Gene Munster noted. The company's revenue was up 71 percent compared to the holiday season of 2009.

Munster also noted that the average selling price of the iPhone increased to $625, which he called surprising.

"This increase in iPhone ASP is evidence that the carrier and consumer interest in the iPhone remains strong, and despite Apple adding additional carriers, ASPs have gone up," he said.

Apple also issued earnings per share guidance above Wall Street consensus for the first time in three years, Munster noted. The company's forecast for its next quarter is $4.90 EPS, a number 10 percent greater than expected on the Street.

Munster said this high guidance suggests that Apple is bullish on the opportunity to sell iPhones to new and existing Verizon subscribers when its CDMA handset goes on sale in the U.S. on Feb. 10. He also sees it as a sign that the company will increase production capacity and meet strong demand for the iPhone 4.

JP Morgan

Following Apple's earnings on Tuesday, analyst Mark Moskowitz increased its price target for AAPL stock to $450, up from $420. He believes the company's stock will be driven higher by break-out performances with the iPhone, iPad and new opportunities in the Asia-Pacific market.

He has also increased his revenue and earnings per share estimates to $23.83 billion and $5.21, respectively. Previously he had forecast revenue of $21.7 billion and EPS of $4.53.

"The company more than delivered," he said. "We are lifting our estimates and expect a series of number hikes. We expect the iPhone, iPad, and Mac to drive above-peer growth over the next 2-3 years."

Looking forward, Moskowitz believes investors will focus on Apple's ability to return its gross margins to between 39 percent and 40 percent over time. He also said that the sustainability of Apple's lead in the tablet market with the iPad will be watched closely.

Oppenheimer

"It's no surprise when Apple tops expectations," analyst Yair Reiner wrote, "but it's fairly rare to see it trounce Street's targets on almost every line. So it did in F1Q11."

Apple's earnings beat even the bullish predictions of Reiner, who had called for revenue of $25.1 billion (vs. consensus of $24.4 billion), as well as his projection of $5.62 earnings per share (vs. the Street's EPS of $5.39).

In particular, he said, the performance of the iPad proved strong, erasing the "disappointment" some saw in sales from last quarter. Reiner had predicted sales of 7 million iPads, which Apple beat by selling 7.3 million.

"The performance is particularly impressive when one considers that many potential buyers are likely biding their time in advance of a probable iPad 2 release in late March or early April," Reiner wrote.

Oppenheimer has raised its 12-month price target for AAPL stock to $425, and expects the company to report $22.9 billion in revenue and $5.18 earnings per share in the second quarter of fiscal 2011. For the entirety of 2011, the firm has forecast revenue of $100.8 billion and $23.92 earnings per share.

Kaufman Bros.

Apple's guidance for the next quarter is "even more upbeat than usual" due to the impending launch of the iPhone on Verizon, analyst Shaw Wu believes. He has increased his 12-month price target to $438, up from a previous prediction of $415.

"AAPL got there by shipping the most iPhones, iPads and Macs ever," Wu wrote. "And iPods didn't do too shabby either, coming in at 19.5 million units, well above expectations of 17.5 million, where strength in its iPod touch business ('the iPhone without a phone') continues to surprise."

Most "amazing" about Apple's quarter was the fact that the company accomplished so much in a tough macroeconomic environment, and against "the strongest companies in the world."

Morgan Stanley

Apple's blowout quarter prompted analyst Katy Huberty to increase her "bull case" scenario for Apple in calendar year 2011, with a high-end potential for $30 earnings per share. That's an increase from the previous $25 projection.

$30 EPS is achievable, she said, with the Verizon iPhone, new retail stores in China, and the possibility of a lower priced iPad launching in April.

"Importantly, we think that consensus expectations for flat gross margins in (calendar year 2011) is too low as Apple will likely benefit from scale and lower component costs," she wrote.

Morgan Stanley has a price target of $410 for AAPL stock, though in its "bull case" scenario, it could hit $540 in the next 12 months.

Ticonderoga Securities

Even with its big upside reported Tuesday, Apple's stock has "plenty of room to run," analyst Brian White believes. Even the announcement that Jobs is taking a leave of absence from the company, he said, is not expected to keep AAPL from reaching new highs.

Accordingly, White has increased his 12-month price target to $550. He sees Apple reaching that goal with the help of tremendous growth in China, where sales saw a four-fold increase year over year.

To put Apple's success in China in perspective, the company achieved revenue of $2.6 billion last quarter, accounting for roughly 10 percent of all of the company's sales. That quarterly result is not far below the $3 billion Apple earned from China in all of its 2010 fiscal year.

UBS

The Verizon iPhone will likely give the carrier its largest pre-order and sales numbers ever, analyst Maynard Um believes. With AAPL stock trading at about 15 times his earnings per share estimate, he sees the stock as a "compelling value" for investors.

The firm has increased its price target to $465, from $415. Um also expects Apple to earn $101.7 billion in revenue in fiscal year 2011, along with $23.25 earnings per share. Those totals are higher than his previous predictions of $93.7 billion in revenue and $20.08 EPS.

Marshall believes Apple is on its way to selling more than 30 million iPads in calendar year 2011. In its first three quarters of availability, the iPad has already topped 15 million in sales.

Gleacher has raised its calendar year 2011 estimates to $104.1 billion in revenue with gross margin of 39.4 percent and earnings per share of $24.50. The firm has also increased its 12-month price target to $400, up from $355.

Deutsche Bank

Analyst Chris Whitmore believes Apple's blowout quarter can be attributed to what he thinks is the best product portfolio in Apple's history. Accordingly, he has increased projected iPhone sales in calendar year 2011 to 67 million, up from 60 million, and has forecast sales of 30 million iPads, up from 28 million.

The firm has increased its price target to $440, with forecast earnings per share of $24 in calendar year 2011, compared to a previous prediction of $21.40. It has also introduced a projected $29 EPS in calendar year 2012.

Most seem to over-value Verizon and under-value China for a 12-month horizon. For the quarter Verizon will just be half of Apple's China revenue, unless the production estimates are all for the quarter not the year.

This (quote below) is a first as far as I can remember. Apple always conservatively under estimate. Perhaps this is a move to offset market fears related to the announcement by Steve that he is taking a leave of absence. I cannot imagine it is a sign of a change of leadership style this early on. Cook is so on the same page as Steve I have to think this has Steve's fingerprints on it.

"Apple has predicted it will report revenue of about $22 billion in its next earnings release, higher than Wall Street's anticipated $21 billion."

I'd have loved to have been a fly on the wall at RIM when this was released ... as they prepare their 'superior' product. I bet it was a case of "Pass the diapers please!"

From Apple ][ - to new Mac Pro I've owned them all.Long on AAPL so biased"Google doesn't sell you anything, Google just sells you!"

This (quote below) is a first as far as I can remember. Apple always conservatively under estimate. Perhaps this is a move to offset market fears related to the announcement by Steve that he is taking a leave of absence. I cannot imagine it is a sign of a change of leadership style this early on. Cook is so on the same page as Steve I have to think this has Steve's fingerprints on it.

"Apple has predicted it will report revenue of about $22 billion in its next earnings release, higher than Wall Street's anticipated $21 billion."

I'd have loved to have been a fly on the wall at RIM when this was released ... as they prepare their 'superior' product. I bet it was a case of "Pass the diapers please!"

I touched on that on another thread. $22B seems high, especially when you consider that Q2 2010 predictions were half that at $11B and the actual was $13.5B. This tells me to expect some major new HW releases this quarter.

This (quote below) is a first as far as I can remember. Apple always conservatively under estimate. Perhaps this is a move to offset market fears related to the announcement by Steve that he is taking a leave of absence. I cannot imagine it is a sign of a change of leadership style this early on. Cook is so on the same page as Steve I have to think this has Steve's fingerprints on it.

"Apple has predicted it will report revenue of about $22 billion in its next earnings release, higher than Wall Street's anticipated $21 billion."

I'd have loved to have been a fly on the wall at RIM when this was released ... as they prepare their 'superior' product. I bet it was a case of "Pass the diapers please!"

What I need to know is it true now that iPhone has really surpassed BB in all shipments from this point onwards? What are RIM's projections for calendar Q4? When are they going to announce their results?

What I need to know is it true now that iPhone has really surpassed BB in all shipments from this point onwards? What are RIM's projections for calendar Q4? When are they going to announce their results?

As I recall, in their last earnings conference call they stated they would longer be discussing Blackberry unit numbers. By extension I suppose that also means no info on the average selling price per handset.

Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"

THIS!
I saw 2 'news' casts this morning mentioning the great quarter, but then saying that Jobs was stepping down as CEO.

That might explain some of today´s (Jan. 19) roller coaster ride in AAPL value. Apparently speculation will continue to shadow the results for some time. IMHO, its best for the market to assume that Steve Jobs will not return, that way if he does then the stock will surge and if he doesn't there will be no impact in AAPL value. Now is a great buying opportunity in any case!

What I need to know is it true now that iPhone has really surpassed BB in all shipments from this point onwards? What are RIM's projections for calendar Q4? When are they going to announce their results?

Their next quarter ends Feb 28th (give or take) and their earnings call is scheduled for March 24th, I believe.

In FY 2010, Apple EPS was $15.15 and the first quarter was $3.67. The ratio is 4.13
In FY 2010, Apple total revenue was $65.2B and the first quarter was $15.7B. The ratio is 4.15
this year - 1st quarter is 26.7B and EPS is $6.43. Applying last years ratio - one gets sales of $110.8 B and earnings of $26.56.

Looking at Q2 FY 2011 and comparing to Q1 FY 2011 - I would expect 10 million fewer ipods and 10% fewer macs. iPhones are constrained this quarter so no drop off there. iPad is in balance in a limited number of countries so the number of countries is expanding and iPad should do no worse than Q1. This leads to a conservative number of 2.2B less than prior quarter. $24.5B in sales, $5.92 EPS.

That might explain some of today´s (Jan. 19) roller coaster ride in AAPL value. Apparently speculation will continue to shadow the results for some time. IMHO, its best for the market to assume that Steve Jobs will not return, that way if he does then the stock will surge and if he doesn't there will be no impact in AAPL value. Now is a great buying opportunity in any case!

I'm curious, been monitoring the stock price this AM following the announcement - it is currently (as of this posting) at 342.07, down from the opening bell but climbing. This is not unusual for post fiscal quarter announcements in the past, so is there some other effect you think is in play here?

If you are going to insist on being an ass, at least demonstrate the intelligence to be a smart one

I'm curious, been monitoring the stock price this AM following the announcement - it is currently (as of this posting) at 342.07, down from the opening bell but climbing. This is not unusual for post fiscal quarter announcements in the past, so is there some other effect you think is in play here?

I guess its the institutional investors trying to figure out what the "CEO premium" is valued at for this particular stock in order to discount it quickly and go back to the fundamentals in further sessions. But then again that assumes some sort of rationality. Just hope the trading opportunism is over soon.

I'm curious, been monitoring the stock price this AM following the announcement - it is currently (as of this posting) at 342.07, down from the opening bell but climbing. This is not unusual for post fiscal quarter announcements in the past, so is there some other effect you think is in play here?

Quote:

Originally Posted by Hal 9000

I guess its the institutional investors trying to figure out what the "CEO premium" is valued at for this particular stock in order to discount it quickly and go back to the fundamentals in further sessions. But then again that assumes some sort of rationality. Just hope the trading opportunism is over soon.

All trading is opportunism. Don't spend too much time staring into the hairy eyeball. It will make you crazy.

Nothing last forever. Sony was once a top player in the portable music device scene, but their own hubris brought them down. Look at Nintendo recently as well. Anyone with an ounce of sense should understand that this growth of Apple's (while quite nice) won't last forever. The moment the growth slows Apple will (while still making $$$) will be seen as a company that has reached maturity and is heading downward. I am not saying this will happen soon, but it will happen.

Also, I really don't expect Jobs to last much longer, health-wise. I hope Apple has a strong and wise replacement for Jobs, because right now people equate Apple and Apple's success with Steve Jobs...they see them as one in the same. When he goes...???

You dont even need to do the math to be able to tell that is wrong. It didnt take them decades to $60B and they are GROWING even faster, so at the same rate they will reach $100B within a few years.

Anyone want to crunch the actual YoY net profit for Apple from 2009 to 2010? I estimate about 3.5 years.

If it's total cash reserves we're talking about here, based on this quarterly report, the current accumulation rate is close to $3b a month. Assuming no continued acceleration, they'll get to $100b by early next year. Then Apple can retire.

If it's total cash reserves we're talking about here, based on this quarterly report, the current accumulation rate is close to $3b a month. Assuming no continued acceleration, they'll get to $100b by early next year. Then Apple can retire.

1) You used a lower-case b, not an upper-case B. does that mean thats ⅛ of that value?

2) How are they gaining $9 BILLION per quarter in cash when there bet quarter in net profit was only a ⅓ of that?

3) Maybe there is some corporate giveaway. Every $10B you accumulate you get your card punched and on the tenth one you get a free start up or a free ticket to the movies and free popcorn and soda upgrade, excluding special events, and premieres.

Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"

1) You used a lower-case b, not an upper-case B. does that mean thats ⅛ of that value?

2) How are they gaining $9 BILLION per quarter in cash when there bet quarter in net profit was only a ⅓ of that?

3) Maybe there is some corporate giveaway. Every $10B you accumulate you get your card punched and on the tenth one you get a free start up or a free ticket to the movies and free popcorn and soda upgrade, excluding special events, and premieres.

2> accounting. earnings = what is deemed taxable. free cash flow is the actual amount of cash you generated that you didn't have to spend (yet)

1) You used a lower-case b, not an upper-case B. does that mean thats ⅛ of that value?

2) How are they gaining $9 BILLION per quarter in cash when there bet quarter in net profit was only a ⅓ of that?

3) Maybe there is some corporate giveaway. Every $10B you accumulate you get your card punched and on the tenth one you get a free start up or a free ticket to the movies and free popcorn and soda upgrade, excluding special events, and premieres.

Probably you've already got your answer to this question, but unless I heard wrong, Apple's cash reserve grew from around $50b to nearly $60b during the quarter, so that's where I get the rate of free cash flow.

I don't get your reference to lower case vs. upper case. Sometimes a "b" is just a "b."

Quote:

Originally Posted by solipsism

Oh, thats possible. I came in at the post and was focused on the previous discussions with Dr. Millmoss about about their cash holdings. Mea culpa to Tallest Skil.

That said, $100B in revenue for a fiscal year (or for an accumulative four consecutive quarters) has probably already begun. Id think they will announce that milestone.

$100B in revenue for a quarter could actually happen in about 3.5 years if they do a 50% increase in revenue YoY per Holiday quarter.

Q1 2009 $10.17 billion

Q1 2010 $15.68 billion (54%)

Q1 2011 $26.74 billion (71%)

Q1 2012 $40.11 billion (50% ?)

Q1 2013 $60.17 billion (50% ?)

Q1 2014 $90.26 billion (50% ?)

Q1 2015 $135.39 billion (50% ?)

I wondered if the question was about revenue or cash reserves, but I figured it had to be cash since nearly all of the analysts cited here project revenues near or exceeding $100b in FY 2011.

As I recall, in their last earnings conference call they stated they would longer be discussing Blackberry unit numbers. By extension I suppose that also means no info on the average selling price per handset.

I think their actual comment was that they would not provide net subscriber data. That is where they are going to really hurt; margins come from additional BES users. A net loss in BES users means they have to rely entirely on handset margin for growth. Tough equation.

I think they are required to give enough information to back out revenue. Maybe not as granular as some would want, but enough to be able to see what is happening relative to their competition.

Basically, any time one reads something by those three, it should automatically be discounted as wrong.

It would be newsworthy if those analysts were ever right about anything, but it appears that one should not expect such a thing to occur.

Not discounted as wrong, but discounted as discounted. Long ago I learned that the professional analysts are always going to be low in their forecasts, some more than others, but still always low. The market knows this, which is why the actual results have to beat the street by a substantial margin, or they will be seen as having disappointed. It's all baked in, really.

This (quote below) is a first as far as I can remember. Apple always conservatively under estimate. Perhaps this is a move to offset market fears related to the announcement by Steve that he is taking a leave of absence. I cannot imagine it is a sign of a change of leadership style this early on. Cook is so on the same page as Steve I have to think this has Steve's fingerprints on it.

"Apple has predicted it will report revenue of about $22 billion in its next earnings release, higher than Wall Street's anticipated $21 billion."

I'd have loved to have been a fly on the wall at RIM when this was released ... as they prepare their 'superior' product. I bet it was a case of "Pass the diapers please!"

It's entirely possible that is a conservative estimate. The only thing that holds apple back is their ability to produce more iPhones and ipads. As production increases they can keep moving into new countries. Demand is there.

So if Apple is always conservative with their estimates and the analysts are also conservative, so basically we are getting a low-low estimates. But, at end of the day at the earning reports, this company continues to have record quarters and not my margin, but significantly! But, the stock got punished today. Today, was a very good example of that. Not that is matters to me as I am long term on this one!